Washington fell to No. 9 in the latest CNBC ranking of best states for business. See the above table for Washington’s scores on the relevant metrics (more here). CNBC skipped 2020 (why not?) so the last previous score was for 2019. Washington ranked No. 5 that year, as the table shows. It’s been a steady slide for the Evergreen State since 2017, when Washington topped the list.
The methodology for Top States for Business 2021 acknowledges the post-pandemic economy.
Our formula for rating the states, which we have used since 2007, is designed to adapt to changing realities — even the seismic changes of the past year.
We start with 10 broad categories of competitiveness. States can earn a maximum of 2,500 points across our 10 categories. The states with the most points are America’s Top States for Business.
We assign a weight to each category based on how hard the states are pushing it in their economic development marketing. We determine that by analyzing every state’s economic development web site. If, for example, more states are pitching their low business costs, Cost of Doing Business carries more possible points.
With the global economy still shaky, Cost of Doing Business is this year’s heaviest weighted category. That follows several years in which Workforce was king. Economic uncertainty may also have helped raise the profile of Access to Capital as companies clamored for the resources to stay afloat. And it is hard to recall a time when infrastructure has been so central to competitiveness, not to mention the national debate. So, the Infrastructure category carries more weight in this year’s study than ever before.
Business costs get 400 points, for 16% of the score. Infrastructure and a new category, Life, Health and Inclusion, each get 375 points, 15% of the weighting. Next, in order, are Workforce (13%), Economy (10%), Business Friendliness (8%), Access to Capital (7%), Technology and Innovation (7%), Education (6%), and Cost of Living (3%).
As always, we acknowledge the subjectivity of the scoring. Different weightings, different measures, and different factors would move the rankings around, possibly considerably. But it’s hard to dispute the importance of business costs and infrastructure (not unrelated to business costs, to be sure) in the post-pandemic world.
Washington state policymakers should take notice. Washington came in a respectable No. 7 in both infrastructure and life, health and inclusion, but a disappointing but unsurprising No. 36 in cost of doing business.
The top states? Virginia takes first place, followed by North Carolina, Utah, Texas and Tennessee.
Ranking in the top ten, many would argue – rightly – is not bad. No. But Washington’s steady decline in the rankings may also be a legitimate topic of concern.